10 reasons why investments in India will increase in the next 5 years

According to the Organization for Economic Co-operation and Development (OECD), India is the 15th in the world in terms of total venture capital/private equity (VCPE) investments received in 2015, with the US in the top spot. These are 10 trends that will propel India into the top 10 in the next five years.

1. Investments in 4G LTE will have at least 2 times the returns as compared to those in 2G/3G.

The $87 billion invested between 2000 and 2014 in 2G and 3G has led to a surge in the telecommunications sector from $14 billion (1.9% of India’s GDP) in 2005 to $118 billion (6.1% of India’s GDP) in 2014.

Source credit: TRAI annual report 2013-14

$35 billion has been invested in 4G LTE. NASCOM is forecasting that telecommunications and new age industries (such as ecommerce) will create 7.7 million new jobs by 2020. According to McKinsey Global Institute, the broadband investment could increase the Indian economy by three to six times by 2022.

Source credit: ZDNet, NASCOM 2020

2. 4G smartphones will outsell feature phones in 1 year

As costs of 4G smartphones keep dropping (more than 50% of smartphones shipped in 2015 cost less than $100) and demand keeps rising, smartphones will outsell feature phones in about a years’ time.

3. Smartphones will change the telecom business model

Mobile data plans are predominantly postpaid in contrast to voice plans which are mostly prepaid. 1GB of mobile data is ₹250 (US$3.65) versus ₹50 (US$0.73) for 1GB of fixed broadband, and prices are falling fast. Switching from prepaid to postpaid models means that telecom companies have to know their customers and treat them better.

Data revenue will overtake voice and SMS revenue in three years and mobile advertising related revenue will become significant with the rise in the app economy.

Source credit: IMRB I-Cube June 2014

4. Young and literate India will force digitization of financial services

Of 1.2 billion Indians, two thirds are under 35 years old and in it is mobile first for this generation.

5. Ecommerce will level the playing field between urban and rural shopping

6. Digital distribution of movie and TV content will explode over the next decade

7. Foodtech still remains underinvested with huge potential

8. Mass urbanization and stretched urban infrastructure will continue to be a major investment opportunity

9. A “made in India” app will have over 100m downloads in the next 2 years

10. Startups are attracting top talent